On 3 April, the new Organic Law 1/2025, enacted on 2 January 2025, came into force, introducing significant reforms to the Spanish judicial system. Its main objective is to encourage out-of-court dispute resolution, reduce the workload of the courts and promote alternative mechanisms that contribute to decongesting the judicial system.
Among the most notable changes is the introduction of a procedural requirement that imposes a mandatory negotiation phase prior to legal proceedings. This requirement clearly applies to disputes arising from distribution, franchise and agency contracts, submitted to Spanish Courts (excluding of course those disputes submitted to arbitration).
This new procedural step, which is mandatory, requires the parties to attempt, in good faith, to reach an out-of-court settlement through Appropriate Dispute Resolution (ADR) before filing a lawsuit. As a result, access to the courts becomes a subsidiary remedy, only available once this prior avenue has been exhausted.
The law provides for various forms of ADR, named “MASC” (Metodo Alternativo de Solucion de Conflictos) in the Law:
- Mediation,
- Public or private conciliation,
- Direct negotiation between the parties, with or without legal representation;
- Confidential binding offer,
- Opinion of an independent expert
- Collaborative law understood as orderly negotiation with lawyers accredited in collaborative law and, where appropriate, neutral expert third parties.
The attempt to resolve the dispute out of court must be proven by reliable documentary evidence, preferably through means such as certified email, the so called “burofax”* or notarial request. These instruments guarantee the certainty of the content of the document, the identity of the sender and recipient, and the date of dispatch and receipt.
The request to initiate a negotiation procedure through ADR, provided that it adequately defines the subject matter of the dispute, interrupts the limitation period or suspends the expiry of the legal actions from the date on which the attempt to communicate with the other party is recorded. This interruption or suspension shall remain in force until the date of signature of the agreement or the end of the negotiation without agreement.
The negotiation process shall be deemed to have ended in the following cases:
- thirty (30) calendar days have elapsed since the recipient received the request without any contact or initial meeting or when there is no written response to a proposal for agreement
- or three months have elapsed since the first meeting without an agreement being reached.
Once the ADR process has been exhausted, the parties have a maximum of one year’s term to file the corresponding claim.
Unjustified rejection or deliberate passivity by one party during the ADR attempt may justify the imposition of legal costs for bad faith, as a punitive measure against conduct that hinders the purpose of the mechanism.
Despite its ambitious scope, the legal reform poses significant interpretative challenges, especially regarding the configuration and practical application of ADR. A debate has arisen among lawyers and academics about the gaps and ambiguities in the new regulatory framework, with the aim of improving its implementation and ensuring its effectiveness.
In practice, courts have begun to raise difficulties regarding the accreditation of prior negotiation attempts. Some lawsuits are being dismissed for failing to provide sufficient evidence of compliance with this requirement. However, the law establishes that binding offers are confidential, which prevents their direct incorporation into the claim. Only the formal communication certifying that the offer has been effectively made by the claimant may be attached. Furthermore, communications between lawyers cannot be used as evidence, which further limits the means available to prove compliance with the requirement.
Finally, it should be noted that in practice, in Spain it was already common to propose to the defendant the possibility of reaching an agreement before filing a lawsuit and, depending on the case, these negotiations were successful, avoiding the claim, or not at all.
*Burofax is a kind of registered letter, very commonly used in Spain by lawyers, where the post service delivers in hand the letter and certifies its date, content, sender and recipient, and also when and who has received it, or whether it has been refused.
A certified email has the same function and content, being the main difference that the burofax is delivered to a postal address while the email is delivered to an electronic address.
Mercedes Clavell, IDI Country Expert for franchising in Spain
